Charles Ponzi

Scheme
 Background of the
Case
> Charles Ponzi was best
known for the financial
crimes he committed
when he conned
investors into giving
him millions of dollars,
and paid them returns
with other investors'
money.

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Charles Ponzi
> Born in 1882 in Parma, Italy, Charles Ponzi was the infamous swindler who
pays out returns with other investors' money. The "Ponzi scheme" is
named after him. Regulating income after running a highly profitable and
expansive investment scheme, Ponzi was arrested on August 12, 1920, and
charged with 86 counts of mail fraud. Owing an estimated $7 million, he
pleaded guilty to mail fraud, and subsequently spent 14 years in prison. He
died on January 18, 1949, in Rio de Janeiro, Brazil.

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 Statement of the Problem
> Does the investor conduct data research to the
company of his interest and the line of industry the
company is in?
> Is the company/seller has the legitimate license to
operate the business?
> In case of law violation by the company/seller, does
the investor knows what precautionary actions he will
make?

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Analysis of the Case

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 Ponzi Scheme
> A Ponzi scheme is a fraudulent investing scam promising high rates of
return with little risk to investors. This scheme is somehow related to the
concept of pyramiding scam which is chronic nowadays. The Ponzi scheme
generates returns for early investors by acquiring new investors. Similar
to a pyramid scheme, both are based on using new investors' funds to pay
the earlier backers. Both Ponzi schemes and pyramid schemes eventually
bottom out when the flood of new investors dries up and there isn't
enough money to go around. At that point, the schemes unravel.

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 Ponzi Scheme
> Hence, we found that the victims of the Ponzi scheme were typically
older and educated. Even if they originally had doubts about investing,
as they watched their friends, neighbors, and relatives receive the
promised returns, they became more inclined to invest. The investors
also were influenced through impression management techniques
used by the perpetrator, such as charitable giving, appearance of
wealth, and demonstrated or described investment expertise. The
perpetrator did not use high-pressure sales techniques; instead, he
relied on impression management and word-of-mouth to entice new
investors.

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 Action plan
Having integrity and being an honest,
hardworking business owner is the best
way to avoid going to prison and gives
the brilliant minds of today the power to
provide services to the world, instead of
trying to take away from the world.
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 Listed below are the solutions one may exercise if
accidentally put investments in a ponzi scheme:

1. Stop investing any 2. Check the legitimacy

more money. Take of the company
precautionary whether it is in the
actions. list of companies you
should not deal with.

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3. Check the company's 4. Report the scam to
licence number on Securities and
Securities and Exchange Exchange
Commission connect's
Professional Registers.
Commission or to
An investor must be any aligned
knowledgeable above all government
negotiable things. organizations.

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 Recommendations:
> Be highly suspicious of any “guaranteed” investment
opportunity. Every investment carries some degree of
risk, and investments yielding higher returns typically
involve more risk.
> Be skeptical about an investment that regularly
generates positive returns regardless of overall
market conditions. Investments tend to go up and down
over time so do not give full trust on the constant one.

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Recommendations:
> Avoid investments if you don’t understand them or
can’t get complete information about them. Most
Ponzi schemes involve unlicensed individuals or
unregistered firms. Be suspicious if you don’t
receive a payment or have difficulty cashing out.
Ponzi scheme promoters sometimes try to prevent
participants from cashing out by offering even
higher returns for staying put.

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Conclusion:
We found that the victims of
the Ponzi scheme were
typically older and educated.
Even if they originally had
doubts about investing, as
they watched their friends,
neighbors, and relatives
receive the promised returns,
they became more inclined to
invest.

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Conclusion:
The investors also were
influenced through impression
management techniques used by
the perpetrator, such as
charitable giving, appearance of
wealth, and demonstrated or
described investment expertise.
The perpetrator did not use high-
pressure sales techniques;
instead, he relied on impression
management and word-of-mouth
to entice new investors.

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Thank you for
Listening
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